Answering questions on patient status

by Kimberly Anderwood Hoy Baker, JD, CPC

This week I thought I’d share a few of the most common questions we get regarding inpatient status, inpatient orders, and the two midnight rule. I hope the answers and source guidance I provided are helpful as you deal with different patient status issues at your hospital.

Q: We have situations when a patient stays in observation for more than 48 hours. How should we bill these cases?

A: There is a Medically Unlikely Edit (MUE) that will allow up to 72 hours of observation to be billed on an outpatient claims (13X). No additional payment will be triggered for reporting more than 8 hours of observation, but all medically necessary, covered hours of observation may be billed up to the 72 hour MUE. The Observation C-APC is triggered with a qualifying visit, 8 hours of observation, and no surgical procedure reported.

I recommend all cases with observation lasting more than 48 hours be reviewed because, at a minimum, you have an opportunity for improvement, but you may also have a compliance issue. If the patient required medically necessary care at the hospital for 48 hours, the physician should have admitted the patient prior to the second midnight so that the patient could access their inpatient benefits. If the patient no longer required medically necessary observation prior to the second midnight but had no safe disposition and remained at the hospital (i.e., custodial/social care), the non-covered hours after the medically necessary observation ended should not be billed as covered. Billing non-covered hours of observation as covered could create compliance issues and potentially, in a few cases, overpayment.

Q: A patient is registered for an outpatient appropriate procedure, but during the procedure it converts to an inpatient-only procedure. An inpatient order isn’t written until the next day when someone in utilization review (UR) notices the procedure is on the inpatient-only list. Do we have to write off the procedure?

A: CMS policy on this changed in April 2015. Prior to that, if the order wasn’t written prior to an inpatient-only procedure, or immediately after in some MAC jurisdictions, the procedure could not be billed on an inpatient claim. And because inpatient-only procedures aren’t paid on outpatient claims, there was no way to be paid for the procedure.

In the April 2015 outpatient prospective payment system (OPPS) update transmittal, CMS changed their three-day payment window policy to allow inpatient-only procedures to be combined onto subsequent inpatient claims within three days. The inpatient-only procedure must meet normal requirements under the three-day window (i.e., occur on the day of the inpatient order or in the three days before and either be diagnostic or a related non-diagnostic service). The current Claims Processing Manual, Chapter 4, Sections 10.12 (Payment Window for Outpatient Services Treated as Inpatient Services) and 180.7 (Inpatient-only Procedures) do not make this clear, because CMS simply removed the prohibition on including inpatient-only procedures under the three-day window. However, the transmittal discusses the change in policy in section 5.

Example: Outpatient laparoscopic cholecystectomy is started and changed to an open procedure mid-procedure on October 3. The patient is taken to the inpatient floor following recovery, but no inpatient order is written until the following day, October 4. The patient is then discharged on October 6. The patient’s admit date is October 4 and length of stay is 2 days. The open cholecystectomy is billed on the inpatient claim, and the payable DRG is the surgical DRG for cholecystectomy, which may vary depending on what else happened during the stay.

To read the complete, detailed artcile that appeared on Medicare Compliance Watch, click here.